Commodity futures markets are a part and parcel of a program for agricultural liberalization. Many agriculture economists understand the need of liberalization in the sector. Commodity Futures markets acts as an instrument for achieving that liberalization. Due to its highly competitive nature, the commodity futures market has become an important economic tool to determine prices, based on today's and tomorrows estimated amount of supply and demand. The Commodity Futures markets are also a place for people to reduce risk when making purchases. Risks are reduced because the price is pre-set, therefore letting participants know how much of the commodity they will need to buy or sell. However, the commodity futures markets also suffer from various drawbacks like problems of lack of price transparency, lack of contract and product standardisation and ‘illegal’ derivatives markets.
Commodity Markets, Derivatives and Agricultural Liberalisation
